Following the 75th Legislative Session in 1997, the Speaker of the Texas House of Representatives, James E. "Pete" Laney, assigned t he House Business and Industry Committee with the following interim charge: "Review workers' compensation insurance carriers' payments and denials of medical benefits and supplemental income benefits. Determine whether carriers' actions are reasonable and consistent with the overall design of the law."

In response, Representative Kim Brimer, Chairman of the Business and Industry Committee, appointed a subcommittee to study this charge. The subcommittee held four public hearings at which participants from all aspects of the workers' compensation community, including doctors, were given the opportunity to testify.

At several of the subcommittee's public hearings, doctors and injured workers testified regarding problems they had encountered within the workers' compensation system. Injured workers felt that they were not receiving adequate and timely medical treatment for their injuries, while doctors expressed frustration with system controls that they perceive as interfering with their ability to treat injured worker patients. 1

To better understand and quantify some of these concerns, the Research and Oversight Council on Workers' Compensation (ROC) conducted a survey of 794 doctors who practice in the area of workers' compensation. Survey findings were reported for the following areas:

Preauthorization of medical treatments

Medical dispute resolution

Carrier required medical examinations

Paperwork

Top healthcare issues for workers' compensation

Other Issues

This survey of Texas doctors was designed to determine whether the problems identified in testimony before the subcommittee are pervasive within the workers' compensation system as a whole. The design of the survey also allowed direct comparisons to be made to a benchmark survey of Texas doctors conducted by the ROC in 1996. 2

The results of the present survey reveal that overall, doctors in the Texas workers' compensation system experience many of the same problems identified by doctors who testified in the hearings:

Lengthy Dispute Process - Survey results affirmed testimony that doctors are reluctant to participate in the medical dispute resolution process, not necessarily because the system is unfair (see Figure 1), but because they cannot justify the time and expense required to pursue a dispute. When asked whether there were aspects of the process that discouraged participation, most doctors responded that the process takes too long, 3 requires too much paperwork, and is not cost-effective (i.e., the amount they would recover is not worth the effort).

Preauthorization Problems - The survey also affirmed testimony that problems exist with the preauthorization process., 4 The four problems most often identified by doctors include:

the carrier's failure to comply with the three-day timeframe for making a decision;

the inability to request preauthorization because no one answered the insurance carrier's dedicated preauthorization phone line, or the line was busy;

Doctors overwhelmingly agreed that preauthorization decisions should be made by the same type of medical professional who recommended the original course of treatment. Looking specifically at denials, most doctors responded that only a Texas-licensed physician should be allowed to deny a request for preauthorization (see Figure 2).

New rules adopted by the Texas Department of Insurance that regulate utilization review agents (URA) involved in workers' compensation are a first step in resolving some of the problems identified through this survey and through testimony received by the subcommittee. 5 One of the key objectives of the new rules is to facilitate effective communication between treating doctors and URAs. Although the new URA rules are designed to address some of the problems that are associated with the preauthorization process, the rules must be adequately enforced.

Carrier Required Medical Examinations (RMEs) - Doctors in this survey were somewhat divided on the role of RME doctors, and thus did not fully support testimony received by the subcommittee that doctors who conduct required medical exams are biased and do not sufficiently examine injured workers. A little over half of the doctors responded that RME doctors are objective in their evaluation of injured workers; spend an adequate amount of time examining injured workers; and examine all relevant medical documentation in evaluating the diagnosis, course of treatment, and/or condition of an injured worker.
Doctors responded that it was not necessary for the treating doctor to be present during an RME to ensure a thorough, objective evaluation of an injured worker. The Act currently provides that an injured worker is entitled to choose a doctor to attend an RME. 6

Paperwork - Doctors responded that excessive paperwork continues to be a problem in the system. However, this survey suggests that at least part of the problem is attributable to unnecessary or redundant requests for medical documentation made by insurance carriers. The requirement contained in the new URA rules that insurance carriers reimburse doctors for the reasonable costs of providing written medical information should help to address this problem.

A working group comprised of TWCC, carrier, and medical provider personnel is currently examining options for achieving further reductions in paperwork. One approach to achieving increased efficiencies might be to provide incentives to medical providers and carriers that demonstrate cost-effective practices, initially through a pilot program. A promising area for improving communication flows is through the increased use of electronic technology for the transmission of medical documentation. This would assist in the tracking of the flow of information in the system while, at the same time, establishing a mechanism for identifying abusive practices by system participants. It would also align the Texas medical billing/reporting system with federal initiatives such as the Health Insurance Portability and Accountability Act 7 to streamline the flow of health insurance data through innovative information technologies.

ANALYSIS OF WORKERS WHO WERE FIRED OR LAID OFF AFTER A WORK-RELATED INJURY

This article is excerpted from An Analysis of Workers who Were Fired or Laid Off After a Work-Related Injury. The full report is available from the Research and Oversight Council upon request, and online.

Although several research projects have examined the factors associated with a worker's ability to return to work following a job-related injury, none have specifically looked at whether an injured worker in fact has a job to which to return. The purpose of this project is to examine the experiences of injured workers who were fired or laid off after sustaining a work-related injury. In particular, this article looks at the percentage of injured workers who were fire d or laid off at some point after their injury, and how being fired or laid off after an injury impacts an injured worker's ability to return to work.

Statewide Rates of Injured Workers Who Were Fired/Laid Off After a Work-Related Injury

Overall, 21 percent of injured workers surveyed reported that they were either fired or laid off after their work-related injury. (It is important to note that this does not mean that these injured workers were fired or laid off as a result of their injuries, only that they were fired or laid off at some point after they were injured. 8) (See Figure 3. )

The most common reason given to injured workers by their employers (according to the workers) for why they were fired/laid off was that they were physically unable to perform their job duties. When injured workers were asked to give their own opinion as to why they were fired or laid off after their injury, most believed it was because they filed a workers' compensation claim; because their doctor said that they couldn't go back to work; or because their employers did not believe that their injury was work-related.

Most injured workers (52 percent) were fired more than six months after they reported their injury, while most laid off workers (64 percent) were let go within six months of reporting their injury to their employer. Interestingly, over one-quarter (26 percent) of laid off workers were let go from their jobs within one week of reporting their injury to their employer. (See Figure 4.)

Understandably, there were definite differences between injured workers who were and were not fired/laid off in terms of how they perceived their employer's support after their injury. Overall, the majority of injured workers who were never fired or laid off (66 percent) reporte d that their employer was either "very" or "extremely" supportive of their efforts to return to work, compared to only 19 percent of injured workers who were fired or laid off after their injury.

Using a statistical modeling method, this study found that injured workers were more likely to be currently employed if: they worked in a physically strenuous job (such as manual labor); they were male; their employer provided light duty after the injury; or their employer provided on-the-job retraining post-injury.

One-quarter (25 percent) of injured workers who were fired or laid off after their injury reported that their employer/supervisor tried to discourage them from filing a workers' compensation claim, compared to 12 percent of injured workers who were never fired or laid off.

Injured workers were less likely to be currently employed if: they had a back injury; they had attorney representation; their employers tried to discourage them from filing a workers' compensation claim; or they worked for a small employer when they were injured.

One important note: based solely on the survey responses of workers who were injured in 1996, this study cannot and does not conclude that these injured workers were fired or laid off because they filed workers' compensation claims. Indeed, workers are let go for a variety of reasons that do not stem from their injuries. However, employers need to be aware that the choice to terminate may lead to additional administrative services that add to claim costs, as well as possible cost shifting to other social support programs. As a result, these injured workers often are involved in more workers' compensation disputes; receive more financial assistance outside of workers' compensation benefits (e.g., food stamps, Social Security Disability Income, etc.) and encounter more personal hardships than injured workers who were able to go back to work with their former employer.

Employers who emphasize return-to-work programs (such as job modification and retraining) not only retain experienced workers but often are able to reduce claim costs as well. Some insurance carriers (though not all) provide discounts to employers who implement safety or return-to-work programs. Although continuity of employment remains the choice of the employer in Texas, there are many benefits -- for the employer, the worker, and the system as a whole -- derived from maintaining the employment relationship following a work-related injury.

ANALYSIS OF CLAIMS REACHING THE 401-WEEK LIMIT FOR INCOME BENEFITS

As part of the workers compensation reforms that were introduced January of 1991, the Texas Legislature implemented a new system of income replacement benefits for injured workers. 9 In general, injured workers are limited to 401 weeks of income replacement benefits, or seven years and 8.5 months. 10 Because the reforms were implemented in January 1991, workers injured during the first quarter of 1991 began to reach the 401-week limitation during the last quarter of 1998. The primary objective of this study is to investigate the frequency of claims that reach the 401-week limitation.

While some states have provisions for injured workers to be compensated for the duration of their disability, many states have limitations on income replacement, either through a maximum dollar amount or through a limitation on the time period that income benefits are paid. In general, the 401 week limitation that Texas utilizes falls between the time periods used in other states as limitations. 11 By comparison, Colorado has a maximum of 208 weeks, which was the shortest time period, and Wisconsin had maximum of 1000 weeks, which was the longest. The length of the average maximum, calculated across all states that have a restriction, is 424.6 weeks.

In order to gain some perspective on how many individuals in Texas will be affected by the 401-week limitation, it may be helpful to first reference the total number of workers compensation claims that were made. 61,024 workers' compensation claims were filed during the first quarter of 1991 (see Figure 5). Of these, over half or 30,687 were medical only claims (i.e., the worker did not receive any income benefits as a result of the injury). Even within claims that have included income replacement, SIBs claims represent a very small number (1.54%) -- less than two percent.

Looking at claims from the first quarter of 1991, those who ultimately went on to receive SIBs accounted for less than one percent (0.77 percent) of all workers compensation claims that were filed. Out of the 469 workers who were injured in the first quarter of 1991 and went on to receive SIBs, only 57 reached the 401-week maximum in August of 1998 (see Figure 6). The graph provides information regarding how long these SIBs claims were active. Of the 469 SIBs claims that were due to injuries occurring in the first quarter of 1991, 439 remained active in 1994. By 1995, only 338 of these SIBs claims from first quarter 1991 remained active. The 57 claims from the first quarter of 1991 that reached the 401-week limitation in 1998 account for 12.2 percent of all SIBs claims from that quarter.

In terms of the level of impairment, there is little difference between those injured workers who "go the distance" and those who do not. It is generally true that injured workers who have higher impairment ratings have claims that last longer. However, data from this study indicates that the average impairment rating for those who reached th e 401-week limit is not significantly higher than that of their SIBs counterparts whose claims are not as long. The average impairment rating of those who have approached the 401-week limit is 23.3 percent. The average impairment rating of injured workers who did not reach the 401-week limit is 22.6 percent. These data suggests that those who have received income benefits the longest are not necessarily more impaired than those whose claims are shorter.

While impairment ratings do not vary significantly between those SIBs recipients who reach the 401-week limitation and those who do not, there are significant differences in the cost of these claims. Medical costs for those who have reached the 401-week limit are over twice as much as the average SIBs claim. The average total medical cost for those who reach the 401-week mark is $121,863. As can be expected, there are large differences in income replacement costs as well between these two groups. The average total indemnity cost for the 401-week group is $80,232 and only $50,820 for the average SIBs claim.

While this study was able to present information on those injured workers who have now reached the 401-week limit on income replacement benefits, the question remains whether the percentage of SIBs claims that "go the distance" will remain constant. One factor that has the potential to highly impact whether SIBs claims remain active is whether the claim is disputed. Data from this study suggest that as time has passed since the new law went into effect, the likelihood of a claim being disputed has increased. As Figure 7 indicates, even though claims from 1991 have had a longer period of time to be contested, a larger percentage of 1991 claims have not been challenged when compared to claims from 1992, 1993, or 1994.

Conclusion

Overall this study found that there are relatively few individuals who continue to receive income replacement benefits through the 401-week limitation. In spite of their low frequency, they are considerably more expensive, both in terms of medical and indemnity costs. Probably because of the expense involved with these claims, the odds are good that they will be disputed at least once. The chances that a SIBs claim will be disputed has increased since 1991, which may have the overall effect of reducing the number of claims in the workers' compensation system that reach the 401-week limit. Since individuals are now reaching the 401-week limit for the first time, future studies may investigate how those injured workers supplement their income after their workers' compensation benefits have ceased.

ROC LIBRARY PROVIDES WORKERS' COMPENSATION RESOURCES

One of the many services that the ROC provides is access to our library of workers' compensation resources. The library contains over 3000 books, articles, journals, magazines and videos to provide information to the public, and to our staff, on the workers' compensation system here in Texas, in addition to many other states.

The collection at the ROC is unique in that it focuses on statistics and data on the experiences of various parties within the workers' compensation system. We are constantly adding new titles. If you need information, we would welcome your visit to the library.

TOP ISSUES IN THE DISPUTE RESOLUTION SYSTEM

The current workers' compensation (WC) dispute resolution system in Texas developed out of concern for the increasing costs, high levels of litigation, and the overall ineffectiveness of the prior dispute resolution system. The system now in place was designed to provide ample opportunity for efficient, cost-effective re solution of disputes through a multi-tiered system comprised of four levels of mediation:

Dispute Resolution Officer (DRO) - attempts to resolve issues through informal mediation to stem further agency involvement on the part of the Texas Workers' Compensation Commission (TWCC). In some cases a dispute is resolved even earlier by Customer Assistance personnel.

Benefit Review Conference (BRC) - an informal proceeding designed to explain the rights of the respective parties in a WC claim, mediate, and resolve disputed issues not resolved by the DRO.

Contested Case Hearing (CCH) - a formal hearing to resolve issues that were raised, but not resolved at the BRC level.

Appeals (AP) - a review in which the decision rendered at the CCH level is evaluated by a panel of administrative judges who can affirm, reverse, or remand the decision of the hearing officer at the CCH level.

The current WC law has been very effective in reducing the number of dispute Proceedings annually. Under the prior law, approximately 60,000 informal hearings were held each year, compared to 28,175 formal and informal dispute proceedings held in 1997. 12 Previous research has shown that 88 percent of disputed issues are resolved without the need for a formal hearing. 13 Previous studies also demonstrate that compensability (i.e., whether the injury was work-related) and income benefits eligibility comprise the vast majority of the dispute activity in the existing dispute resolution process.. 14 This article seeks to re-visit this area by identifying the top five most frequently disputed issues at BRCs and CCHs, with the purpose of highlighting possible areas for improvement in system efficiency. 15

Findings

Table 1 presents the top five disputed issues for BRCs and CCHs for the years 1995 through 1997. Highlights include:

The top five issues represent one-half to two-thirds of all issues raised at the BRC level (55.9 to 63.4 percent). A similar pattern exists at the CCH level (55.5 to 66.9 percent of all issues).

Two issues consistently appear in the top five -- the compensability of the injury, and the existence, extent, or duration of disability raised by other evidence.

Issues related to Supplemental Income Benefits (SIBs) become the most frequently disputed issues at both BRC and CCH levels of dispute resolution in recent years. 16

Compensability of the injury considers whether the injury arose out of and in the course and scope of employment for which compensation is payable. Disputes regarding compensability must be raised within the first 60 days. While compensability disputes have dominated benefit hearings during the last three years, they appear to be diminishing in relative frequency: compensability issues dropped from 15.5 percent of BRCs in 1995 to 9.3 percent of BRC in 1997. The pattern is similar for compensability disputes brought to the CCH level. This decrease is most likely a function of decreasing injury rates and hence a reduction in lost-time claims overall. According to a recent TWCC report, the injury rate per 100 full-time workers has decreased 18 percent from 7.7 in 1991 to 5.6 percent in 1997. 17

Disputes concerning the existence, duration, or extent of disability raised by other evidence appear to be more stable relative to compensability disputes for the years 1995 through 1997, hovering around 16 percent of all issues disputed per year. Disputes concerning the existence, extent and duration of the injury are raised when the insurance carrier believes there is evidence contradicting the injured worker concerning these issues. These two issues alone account for a vast majority of the issues raised at BRCs and CCHs. For example, in 1996, they accounted for 30.5 percent of the issues raised at BRCs, and 37 percent at CCHs.

SIBs issues represented 7.2 percent of issues raised at the BRC level and 6.8 percent at the CCH level for hearings held in 1995. 18 While SIBs issues did not make it to the top 5 at the BRC level in 1996, they were number 6, representing 5.9 percent of issues raised at BRCs in 1996. The number of SIBs issues raised at both hearing levels increased sharply in 1997, representing approximately 20 percent and 25 percent of issues raised at BRCs and CCHs respectively. The increase in SIBs disputes may be due to an increase in injured workers who were eligible for SIBs, combined with the frequency with which reapplication for benefits is made (quarterly), as well as more disputes among late stage SIBs recipients.

Summary

The current system of resolving disputes is by most accounts a significant improvement over the old system.

Of the top disputed issues, SIBs issues are on the rise, compensability issues are declining, and existence/extent/duration issues are holding steady.

The problem areas in SIBs have been recognized, and are currently being addressed through the development of new rules adopted in January 1999, designed to clarify gray areas in the law. Further review of statute and rules may determine if clarification is in order to address the other top dispute issues.

This article is excerpted from a full report which will be available from the Research and Oversight Council in the Spring of 1999.

Footnotes:

To put this testimony in a larger context, a recent survey conducted by the ROC found that 79 percent of injured workers felt that they received adequate medical care that met their needs. However, 46 percent felt that the insurance carrier had tried to delay or deny some needed medical treatments. See An Examination of Strengths and Weaknesses of the Texas Workers' Compensation System, Research and Oversight Council on Workers' Compensation, August 1998.

See Survey of Texas Doctors Who Participate in the Workers' Compensation System, Research and Oversight Council on Workers' Compensation.

For the first year such data were collected (6/16/97 _ 6/16/98), the TWCC Medical Dispute Resolution Information System (MDRIS) database revealed that preauthorization disputes took an average of 41 days to resolve; medical necessity disputes took an average of 272 days to resolve, and fee disputes took an average of 117 days to resolve.

The Texas WC system utilizes retrospective review for all medical treatments and services provided to injured workers except for the sixteen listed in the TWCC Preauthorization Rule. Medical services which require preauthorization, if not preauthorized, relieve the carrier of financial liability for that medical service.

The new URA rules were published September 18, 1998 and went into effect September 20, 1998. URAs have six months to conform to the requirements and obtain licensing.

See Texas Labor Code, Section 408.004(d). This provision also requires the carrier to pay a TWCC-establi shed fee to a doctor selected by the employee.

The Health Insurance Portability and Accountability Act (HIPAA), also known as the Kennedy-Kassenbaum Act, was signed into law on August 21, 1996.

It is against the law in Texas to discharge or otherwise discriminate against a worker because he or she has filed a workers' compensation claim. Violation of this law can result in reinstatement of the injured worker and the award of reasonable damages in a civil court action. See Chapter 451 of the Texas Labor Code.

There are three main tiers of income benefits in the Texas WC system: Temporary Income Benefits (TIBs), paid while the worker is recovering from an on-the-job injury; Impairment Income Benefits (IIBs), paid to injured workers for permanent impairments for a statutorially-set period of time; and Supplemental Income Benefits (SIBs), paid to injured workers for wage loss after all IIBs have been exhausted.

An exception to this rule occurs for those who receive Lifetime Income Benefits (LIBs). LIBs are provided to workers who have suffered from severe injury, which includes the loss of an extremity, loss of eyesight, and injury to the head or spine that causes significant paralysis or severe brain dysfunction.

The data for this study are provided by the Texas Workers' Compensation Commission (TWCC) Dispute Resolution Information System (DRIS), and are comprised of issues disputed at BRCs and CCHs held in the years 1995 through 1997.

SIBs are available to injured workers with permanent impairment ratings of 15 percent or more who, at the expiration of the impairment income benefit period, have not returned to work or have returned to work earning less than 80 percent of their pre-injury wages. The worker must reapply quarterly for SIBs benefits based on success in earning wages or finding work.